Nigeria's telecoms regulator has started reviewing interconnection rates for the first time in eight years. The NCC says the last review happened back in 2018.
Interconnection rates, technically called Mobile Termination Rate or MTR, work like this: one network pays another when a customer calls someone on a different network. It's the wholesale price that keeps all Nigerian phone subscribers connected.
Right now, operators pay N3.90 per minute for calls and N4.70 per minute for SMS services. If the NCC raises these rates, everyday users will likely see their phone bills go up.
The regulatory body held a stakeholders' forum in Lagos on Tuesday to discuss the review. Industry experts warned that rates set too low can discourage network investment.
Wole Adenekan, a partner at KPMG, spoke at the gathering about the economic implications. He stressed that cost-based rates encourage efficient investment and boost the country's economy.
According to Adenekan, improperly set MTRs can allow bigger operators to shut out smaller competitors through termination barriers. A fair rate structure, he argued, levels the playing field for everyone.
When termination charges are inflated, customers end up paying the price through higher retail costs. Adenekan pointed out this reality during his address.
Several factors have changed since 2018, making a review necessary. The naira has weakened significantly, inflation has surged, and equipment costs have jumped.
Energy expenses have also risen dramatically across the sector. These cost pressures have fundamentally reshaped how operators do business.
Technology shifts are another reason for the review. 5G networks are now operational, and artificial intelligence plus internet-of-things services are becoming mainstream.
These new technologies change how networks function and what they cost to operate. Legacy frameworks from 2018 no longer match current reality.
Over-the-top platforms like WhatsApp and Telegram are also reshaping the market. They're capturing voice and messaging traffic that traditionally went through operator networks.
This competition is weakening the wholesale revenue streams operators depend on. The old interconnection model isn't working as it once did.
Notably, the 2018 MTR determination was never adjusted for domestic rates. A 2022 amendment only touched international termination rates, leaving a gap.
Omotayo Mohammed heads the NCC's competition and tariff unit. She described the review as a major economic intervention for the sector.
Mohammed told attendees the NCC plans to examine current retail price controls during this process. The agency also wants to look at asymmetry arrangements.
Consumer protection remains at the center of the review, she noted. The NCC must balance operator needs with what's fair for subscribers.
Mohammed explained that the telecoms market has transformed drastically since 2018. New players like MVNOs have emerged, and commercial 5G deployment changed everything.
Global and domestic economic conditions have shifted just as dramatically. Exchange rates and inflation have rewritten the rules.
